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FRENCH CJ

GUMMOW J

HAYNE J

HEYDON J

CRENNAN J

KIEFEL J

BELL J

10 FEBRUARY 2010

Judgment

French CJ

INTRODUCTION

On
1 November 2006, bore licences held by the appellants, who are farmers in
the Lower Murray region of New South Wales, were by operation of the Water Management
Act 2000 (NSW) "replaced" with aquifer access licences. The
appellants' entitlements to extract groundwater were less under the aquifer
access licences than under the bore licences. The replacement was effected
under the same statutory scheme and pursuant to the same intergovernmental
agreements as were considered in ICM Agriculture Pty Ltd v The
Commonwealth
(2009) 261 ALR 653; [2009]
HCA 51.

The
appellants challenged the replacement of their licences on a number of
grounds, including two arising under the Constitution.
Broadly, they were that the replacement, pursuant to a Funding Agreement
between the Commonwealth and the State of New South Wales, constituted an
acquisition of their property on other than just terms contrary to s
51(xxxi) of the Constitution and that the Funding Agreement itself was a regulation of trade or commerce
which contravened s
100 of the Constitution[1].
That section provides:

The Commonwealth shall not, by any law or regulation of trade or
commerce, abridge the right of a State or of the residents therein to the
reasonable use of the waters of rivers for conservation or irrigation.

Having
regard to the decision of this Court in ICM Agriculture Pty Ltd, the
challenge based on s
51(xxxi) cannot succeed. For the reasons given below, the challenge
based on s
100 of the Constitution must also fail.

Although
the statutory scheme under which the appellants' bore licences were replaced
was the same as that considered in ICM Agriculture Pty Ltd, there
were certain aspects of its implementation particular to these appellants. A
brief outline of the history of the statutes, statutory processes and
intergovernmental agreements culminating in the replacement of the licences
follows.

FRAMEWORK OF STATES AND INTERGOVERNMENTAL
AGREEMENTS

The
statutes, intergovernmental agreements and statutory processes applicable to
the appellants in the present case included the following:

Water Act
1912 (NSW). The appellants' bore licences were held under Pt 5 of this Act relating to artesian wells:
s 112. They were subject to limitations or conditions which could be imposed at
the time of grant or thereafter: s 116C.

Water Management
Act 2000 (NSW). Section
50 of this Act provides for the Minister to make, by order published
in the Gazette, plans for water management areas or parts of the State
not within such areas. Schedule 10 to this Act provides for conversion
of "former entitlements to access licences and approvals". It
applies to categories or subcategoriesof access licences
relating to a part of the State or water source to which Pt
2 of Ch 3 of this Act applies by operation of a proclamation
under s
55A (Water
Management Act 2000 (NSW), Sched 10, cl 1(a)).
Aquifer access licences are a category of access licence created by this
Act (ss
56 and 57(1)(e)).
An access licence entitles its holder, inter alia, to specified shares
in available water within a specified water management area and to take
water at specified times and rates, or in specified circumstances, and
from specifiedareas or locations (s 56(1)).

The
Intergovernmental Agreement on a National Water Initiative, made on 25
June 2004 between the Commonwealth Government and the governments of New
South Wales, Victoria, Queensland, South Australia, the Australian
Capital Territory and the Northern Territory. The Agreement provided for
the establishment of a National Water Commission to assist with its
effective implementation and the accreditation of the parties'
implementation plans. Provisions of the Agreement relevant to the
reduction of water access entitlements are set out in the joint judgment
of Gummow and Crennan JJ.

The
Intergovernmental Agreement, made on 25 June 2004 between the
Commonwealth Government and the governments of New South Wales,
Victoria, South Australia and the Australian Capital Territory, on
addressing water over-allocation and achieving environmental objectives
in the Murray-Darling Basin.

The
National
Water Commission Act 2004 (Cth), which commenced on 17 December 2004. This Act
(s 24(1)(a) read with s 7(1)(d)(ii)) established the National Water Commission, which has a number of
functions including assisting with the implementation of the National
Water Initiative and undertaking activities promoting its objectives and
outcomes. The Chief Executive Officer of the National Water Commission had, among
his or her functions (s 24(1)(a) read with s 7(1)(d)(ii)), that of administering financial assistance awarded
by the Minister to particular projects relating to Australia's water
resources, either from the Australian Water Fund Account or any other
Commonwealth program relating to the management and regulation of
Australia's water resources.

The
Funding Agreement made on 4 November 2005 between the Commonwealth and
New South Wales providing for funding from the Australian Government
Water Fund for the "Water Smart Australia Project: Achieving
Sustainable Groundwater Entitlements". Under the Agreement, New
South Wales was to implement water sharing plans pursuant to the Water
Management Act to reduce the water entitlements of water licence
holders in, inter alia, the Lower Murray groundwater system. The
Commonwealth was to provide funding to a maximum of $55 million for the
project. The State was required, under the Agreement, to "develop a
package of upfront ex gratia structural adjustment payments to licence
holders of Groundwater Systems for the purpose of assisting those
licence holders manage the impact of their reduced water
entitlements."

The
Water Sharing Plan for the Lower Murray Groundwater Source 2006 made by
order of the Minister for Natural Resources pursuant to s
50 of the Water
Management Act and published on 20 October 2006 in the New South Wales
Government Gazette. The Water Sharing Plan commenced on 1 November
2006. Itapplied to the water management area known as the Lower
Murray Groundwater Source, including all water contained in specified
"unconsolidated alluvial aquifers deeper than 12 metres below the
ground surface" (cl 5(1)) within a defined area. The definition of "aquifer" in the Water
Management Act
was applied to the Water Sharing Plan by virtue of cl 6(1) of that Plan.
The term "aquifer" was defined in the Water
Management Act Dictionary as:

a geological structure or formation, or an artificial landfill, that
is permeated with water or is capable of being permeated with water.

By cl 27 of the Water Sharing Plan the share components of entitlements
greater than 20 MLunder the Water
Act 1912, which were to become aquifer access licences, were to be calculated
by reference to the extraction history of each licence holder.

The
proclamation on 25 October 2006 by Her Excellency, the Governor of New South
Wales, pursuant to ss
55A(1) and 88A(1)
of the Water
Management Act, that:

Part
2 of Chapter 3 of [the Water
Management Act] applies to each water source to which the Water
Sharing Plan for the Lower Murray Groundwater Source 2006 applies, and
to all categories and subcategories of access licences in relation to any
such water source.

This proclamation applied Sched 10 to the Act to the area in which the
appellants held their bore licences. It effected the "replacement"
of those bore licences with aquifer access licences, with effect from 1 November
2006.

The
coming into effect on 1 November 2006 of the Water Management (General)
Amendment (Lower Murray) Regulation 2006, which amended the Water
Management (General)
Regulation 2004 by the insertion of a new Div 5 of Pt 3 and Sched 4Binto that Regulation. The schedule specified the
amounts of the entitlements calculated under cl 27 of the Water Sharing
Plan.

PROCEEDINGS IN THE LAND AND ENVIRONMENT COURT

On
22 January 2007, the appellants commenced proceedings in the Land and
Environment Court of New South Wales challenging, on a variety of grounds,
the validity and operation of the statutes, statutory instruments and
regulations underpinning the purportedreplacement of their bore
licences. The Minister administering the Water
Management Act was named as respondent. The State of New South Wales
and the Commonwealth of Australia were later joined as second and third
respondent respectively.

By
their further amended application filed 16 November 2007the
appellants sought a declaration of the invalidity of the National
Water Commission Act
or the provisions of that Act so far as it related to water and waterresources[2].
They sought a declaration that Pts
2 and 3 of Ch 3 and Sched 10 of the Water
Management Act were inoperative with respect to their licences and
that the proclamation of 25 October 2006 was also inoperative. In addition,
they sought declarations that the Water Management (General) Amendment
(Lower Murray) Regulation 2006 and the Water Sharing Plan for the
Lower Murray Groundwater Source 2006 Orderwere void and inoperative.
Injunctive relief and damages were also sought.

On
21 December 2007, Lloyd J, on the motion of the Commonwealth, dismissed the
proceedings as against the Commonwealth on the basis that the Land and
Environment Court had no jurisdiction to entertain them: Arnold v Minister Administering Water Management Act 2000 [2007]
NSWLEC 531; (2007) 157 LGERA 379 at 406 [86]. His Honour went on (ibid at 408
[98]) to hold that the Court "should also dismiss or stay
the applicants' application in so far as it concerns the Commonwealth on the
basis it discloses no reasonable cause of action as against the Commonwealth
or on the basis that it is frivolous or vexatious". His Honour held (ibid at 408
[99]) s 51(xxxi) was not applicable, absent a law of the
Commonwealth with respect to the acquisition of property. As to the alleged contravention of s 100 of the Constitution,
he accepted (ibid at 403 [72]) the Commonwealth's submission that the section only affected
laws made under s 51(i) of the Constitution. In addition, his Honour held
(ibid at 408 [97]) that the appellants lacked standing to seek the
relief they sought against the Commonwealth.

PROCEEDINGS IN THE COURT OF APPEAL OF THE SUPREME
COURT OF NEW SOUTH WALES

On
4 December 2008, the Court of Appeal of the Supreme Court of New South Wales
granted the appellants leave to appeal against the decision of the Land and
Environment Court, but dismissed the appeal: Arnold v Minister Administering the Water Management Act 2000 [2008]
NSWCA 338; (2008) 73 NSWLR 196. It held that the Land and Environment Court did have jurisdiction to
entertain the claim against the Commonwealth: Ibid at 217 [86] per Spigelman CJ, Allsop P and Handley AJA agreeing at 225 [147] and [148]
respectively.
Nevertheless, it upheld that Court's summary dismissal of the proceedings
against the Commonwealth on the basis that they disclosed no reasonable
cause of action. None of the Commonwealth statutes relied upon by the
appellants constituted a law of the Commonwealth with respect to the
acquisition of property: Ibid at 218 [96] and 221 [109]-[110].
Nor was there any basis for the contention that the "joint
venture" between the Commonwealth and New South Wales was a circuitous
device to avoid the constraints imposed by s 51(xxxi) and s
100 of the Constitution: Ibid at 224 [134].
In relation to s 100,
the Court held (ibid at 217-218 [93]) that none of the statutes or agreements relied upon by the
appellants could be characterised as a "law or regulation of trade or
commerce". The prohibition in s 100 applied only to laws made under s
51(i) of the Constitution: Ibid at 217 [89]- [92].
The Court (ibid at 225 [145]) also upheld the conclusion by the Land and Environment Court that
the appellants lacked the requisite standing to obtain relief against the
Commonwealth.

On
1 May 2009, this Court granted to the appellants special leave to appeal
against the decision of the Court of Appeal on two grounds and referred to a
Full Court the question whether special leave should be granted in respect
of a ground relating to s
100 of the Constitution.

GROUNDS OF APPEAL – DISPOSITION

The
grounds of appeal on which special leave was granted are:

The New South Wales Court of Appeal erred in holding that a grant made
by the Commonwealth to a State on condition that the State acquire property
on unjust terms is not invalid; and that it was not ultra vires the
legislative power of the Commonwealth to authorise an agreement that
requires a State to use its powers to acquire property on unjust terms.

The New South Wales Court of Appeal erred in holding that the invalidity of
a Commonwealth-State agreement was not legally relevant to the State
Minister's decision to issue the 2006 Plan notwithstanding that the Minister
was guided by that agreement.

The first of these grounds of appeal fails for the reasons set out in the
joint judgment of Gummow and Crennan JJ and myself in ICM Agriculture Pty
Ltd [2009]
HCA 51; (2009) 261 ALR 653.
The second of the grounds is parasitic on the first and fails with it. I agree
generally with the reasons of Gummow and Crennan JJ in their joint judgment in
relation to these grounds of appeal.

THE
REFERRED SPECIAL LEAVE MATTER

The
application for special leave was referred to a Full Court in relation to
the ground that:

The New South Wales Court of Appeal erred in holding that the National
Water Commission
Act 2004 and the 2005 Funding Agreement were not laws or regulations of
trade or commerce within the meaning of section
100 of the Constitution.

The
Commonwealth attached to its submissions a draft notice of contention it
wished to file in the event that special leave were granted. The matters
raised on the draft notice were that, for the purposes and within the
meaning of s
100 of the Constitution:

(1)

There was no law or regulation of the Commonwealth by which any
right of the appellants was 'abridged';

(2)

Such
rights as the appellants formerly had were not to the use of the waters of
any 'river';

(3)

There
was no abridgment of the 'reasonable use' of any waters for conservation or
irrigation.

THE PLEADINGS AND ARGUMENT ON THE SECTION 100 GROUND

The
Court of Appeal ([[2008]
NSWCA 338; (2008) 73 NSWLR 196 at 217 [92])disposed of the appellants' argument on the basis
that Morgan v The Commonwealth
(1947) 74 CLR 421; [1947]
HCA 6
was binding authority for the proposition that the words "by any law or
regulation of trade or commerce" in ss
98 to 102 of the Constitution referred only to laws made under the trade and commerce power in s 51(i)..
Although, it was said, there were obiter dicta by Deane J in The Commonwealth v Tasmania [1983]
HCA 21; (1983) 158 CLR 1 at 251; [1983]
HCA 21 (The Tasmanian
Dam Case)
suggesting that this Court might reconsider Morgan, the Court of
Appeal held (supra at 217-218 [93]) that, in any event, no statute or agreement relied upon by the
appellants could be characterised as a "law or regulation of trade or
commerce".

The
Court of Appeal dealt with the grounds raised by the appellants before it on
the assumption that the factual allegations relied upon to support their
claims for relief were true. Paragraph 36 of the appellants' further amended
points of claim in the Land and Environment Court alleged:

Further or alternatively in the premises the [Commonwealth] has by a
law or by regulation of trade or commerce of the Applicants and/or water
users of New South Wales abridged the rights of the State and of the
residents of the State to the reasonable use of the waters of the State
including the Murray River and its tributaries and linked aquifers being
ancient underground rivers in the particular circumstances of the case for
conservation or irrigation.

This was a pleading which on the face of it established a less than
substantial factual foundation for the appellants' invocation of s 100. The appellants submitted that it had been assumed, for the purposes of the
summary dismissal application, that the waters the subject of the rights
abridged pursuant to the Funding Agreement were "waters of rivers"
within the meaning of s
100. But that assumption involved an assumption of law, namely that
groundwater as described in the Water Sharing Plan made pursuant to the
Funding Agreement was capable of constituting the "waters of rivers"
for the purposes of s
100. That assumption was not accepted in argument before this Court: [2009]
HCATrans 204 at 4820-4919.
The pleading as drawn referred to "waters of the State", a term
which describes no relevant category of water. The pleading must be taken, in
the circumstances, as asserting that the appellants are residents of the State
of New South Wales, whose rights to the reasonable use of the waters of the
Murray River have been abridged. The reference to "tributaries" can
be taken as a reference to the waters of the Murray River. The concept of
"linked aquifers" which are underground rivers is unclear. It was
not asserted that the aquifers themselves are part of the Murray River. Nor
does the pleading conveythatthereare currently flowing
"ancient underground rivers".

The
Court of Appeal said (supra at 217 [88]) that no issue arose in this case as to whether or not
groundwater fell within the concept of "waters of rivers" in s
100.
As noted above, however, this involved a question of law which was agitated
on the referred application for special leave to this Court.

The
appellants argued that the words "law or regulation of trade or
commerce" in s
100are not confined to laws made under s 51(i). They sought leave to reopen Morgan, and submitted that it should be
overruled. They submitted that the Funding Agreement was a regulation of
trade or commerce and wastherefore subject to the guarantee in s
100 and invalid for contravening it. The next step in their argument was
that the Funding Agreement determined the content of the 2006 Water Sharing
Plan. They submitted that whether the Minister's decision to promulgate the
Water Sharing Plan was vitiated by the invalid Funding Agreement was a
question of fact dependent upon evidence to be decided at trial, and should
not have been determined on a summary judgmentapplication.

THE DRAFTING HISTORY OF SECTION 100

Words
reflecting the substance of what is now s
100 of the Constitution were first included in the draft Constitution at the Melbourne session of the Australasian Federal Convention in 1898. The
draft Constitution which had emerged from the Adelaidesession in 1897 would haveconferred
legislative power on the Federal Parliament with respect to[3]:

Section
52(I) – The regulation of trade and commerce with other countries, and
among the several States;

Section
52(VIII) – Navigation and shipping; and

Section
52(XXXI) – The control and regulation of the navigation of the River
Murray, and the use of the waters thereof from where it first forms the
boundary between Victoria and New South Wales to the sea.

In
a critique of the 1897 draft Bill, Inglis Clark referred to decisions of the
courts of the United States establishingthat Congress had power to
legislate, under the commerce power in the United States Constitution,
with respectto the use of all the navigable rivers as highways for
commerce between those States or with foreign countries: Williams, The Australian Constitution:
A Documentary History, (2005) at 706.
The reference to "navigation" in s 52(VIII) of the 1897 draft of the Australian Constitutionpractically repeated the gift of legislative power already conferred on
the Parliamentby s 52(I). Inglis Clark said that it was therefore unnecessary to mention any
particular river in this connection. He would have reduced the s
52(XXXI) power to a power to make laws with respect to the use of the
waters of the River Murray for irrigation and manufacturing purposes.

In
the event, s
52(XXXI) was deleted at the Melbourne session of the Convention in 1898.
This left regulation of the rivers, as Professor Williams has observed (ibid at
795), "subject to a combination of 52(I), the 'trade and commerce' clause,
and 52(VIII)." A limiting amendment to s
52(VIII), foreshadowing s
100, was proposed by Mr Reid (Official Record of the Debates of the
Australasian Federal Convention, (Melbourne), 7 March 1898 at 1989) so that the section read:

The powers contained in this sub-section, and those relating to trade
and commerce under this Constitution,
shall not abridge the rights of a state or its citizens to the use of the
waters of rivers for conservation and irrigation.

The South Australian delegate, Sir John Downer, proposed the insertion of the
word "reasonable" before "use" (ibid at 1989),
and this amendment was accepted (ibid at 1990). Section
52(VIII) was agreed with the incorporation of the Reid and Downer
amendments. Their limitationswere subsequently taken out of the power
provision by the Drafting Committee and redrawn in terms of the current s
100 (initially numbered s 99):
Williams, The Australian Constitution:
A Documentary History, (2005) at 795-796 and 1107.
The deletion of the reference to navigation and shipping in the powers listed
in what was thens 52 reflects an acceptance of the proposition that laws relating to such matters
fell within the trade and commerce power.

The
navigation and shipping power, for which s 52(VIII) provided, was relocated in s 98 along with the power to make laws with respect to railways the property of
any State. Those powers were, in effect, declared to be part of the power of
the Parliament to make laws with respect to trade and commerce.

Quick
& Garran (The Annotated Constitution of the Australian Commonwealth, (1901) at 873, referring to the Official
Record of the Debates of the Australasian Federal Convention, (Melbourne),
11 March 1898 at 2386-2390)), commenting on the inclusion of the railways provision in s 98,
said that:

The object of substituting the declaratory for the enabling form was
to prevent any limitation of the trade and commerce power being implied; and
the object of the provision itself was to remove doubts as to whether
State-owned railways were subject to the trade and commerce power.

The use of the declaratory form in relation to "navigation and
shipping" was said to have been inserted into its present position"for
similar reasons": Ibid at 873.

SECTION 100 OF THE BORE LICENCES

Section
100 of the Constitution gives rise to a number of important constructional questions, some of which
were agitated before this Court on the referred application for special
leave. The section was described by Quick & Garran (ibid at 880) as being one which
takes its place in the Constitution,
along with s 99,
as "a further limitation of the trade and commerce power." The limitations in ss 99 and 100 were held in Morgan
(at 454-455 per Latham CJ, Dixon, McTiernan and
Williams JJ) to be confined to laws made under s 51(i)[4]
of the Constitution.
That confinement of the limitation was endorsed by three of the Justices in The
Tasmanian Dam Case ( at 153-154 per Mason J, 182 per Murphy J (who did
so on the wrong assumption that the correctness of Morgan had not been
challenged), 249 per Brennan J).
No reference was made in Morgan, nor later in The Tasmanian Dam
Case, to the drafting history relating to s
99 or s 100. That is not surprising.It was not until Cole v Whitfield
(1988) 165 CLR 360; [1988]
HCA 18
that this Court ([1988]
HCA 18; (1988) 165 CLR 360 at 385) accepted that such references could be made to ascertain the
contemporary meaning of language used in a provision of the Constitution,
the subject to which that language was directed, and the nature and
objectives of the movement towards federation from which the Constitution emerged.
However, the invitation to overrule Morgan should be declined for
present purposes. This case does not require that its correctness be
re-examined, although the artificiality of its consequences, to which Mason
J adverted in The Tasmanian Dam Case at 154,
remains.

The
appellants' invocation of s
100 was directed to the validity of the Funding Agreement. It was upon
the premise of its invalidity that they based their submissions that the
exercise of ministerial power in making the Water Sharing Plan was vitiated.
Having regard to the drafting history and irrespective of the correctness of
the Court's decision in Morgan, it is difficult to see how an
agreement made between the executive governments of the Commonwealth and the
States could, of itself, constitute a "law or regulation of trade or
commerce". There is also an interesting question whether the term
"right of .... the residents" in s 100 is used in a collective senserather than as a reference to
individual rights[5].

Critical
and sufficient for the disposition of the application is the question
whether the rights of the appellants said to have been abridged by the
replacement of their bore licences related to the use of the "waters of
rivers" within the meaning of s
100.

The
drafting history in my opinion makes clear that the qualification on
Commonwealth legislative power imposed by s 100 was directed to the application, to the waters of rivers, of legislative
powers with respect to trade and commerce and navigation and shipping. The
subject matter of the limitation originally contained in the proposed s 52(VIII),
as adopted at the Melbourne session of the Convention in 1898, was rivers
which could be used for navigation or shipping. Mr Reid's amendment of s 52(VIII) to include a reference to trade or commerce nodoubt reflected in
part the view expressed by Inglis Clark that the trade and commerce power
would extend to navigation and shipping. Section
98 in the final draft put that proposition beyond doubt.Against
this background, and without suggesting that the prohibition is limited to
navigable rivers, there is no plausible basis for construing the limitation
as applying to underground water in aquifers.

Recognition of the importance of context in the interpretation of a
text that was written a century ago is not inconsistent with the role of the Constitution as a dynamic instrument of government. It is no more than an application of
orthodox legal principle.

Quick
& Garran reflected contemporary understanding of the concept of the
"waters of rivers", in the observation that:

A river is a stream flowing in a defined channel; and the waters of a
river are the waters flowing over its bed and between its banks. Rainwater
flowing over or percolating through the soil, but not flowing in a defined
channel, is not the water of a river (see McNab v Robertson [1897] AC 129 at
134). Artesian water is therefore not the water of a river; nor, it would seem, is
flood-water which has escaped from the banks of a river and overflowed the
surrounding country.

(The Annotated Constitution of the Australian Commonwealth, (1901) at
893.)

The
rights conferred by the appellants' bore licences related to underground
water. The Water Sharing Plan 2006 applied to the Lower Murray Groundwater
Source, the definition of which was referred to earlier in these reasons. It
applied to underground water, not to the waters of rivers within the meaning
of s 100.The pleading of this aspect of the appellants' claim provides no
foundation for a contention of fact which, assumed in their favour for the
purposes of the summary dismissal application, could have sustained their
contention about s 100. The dismissal should stand.

CONCLUSION

Special
leave to appeal should be granted on the s 100 ground, and leave to the Commonwealth to file its notices of contention in
relation to s 100 and s 51(xxxi) (confined to ground 2). The appeal should be dismissed with costs in favour
of the Commonwealth. The State of New South Wales and the Minister sought no
order as to costs.

Gummow
J & Crennan J

This appeal and application for special leave were heard
immediately after ICM Agriculture Pty Ltd v The Commonwealth [2009]
HCA 51; (2009) 261 ALR 653; [2009] HCA 51 and there are a number of issues common to each matter. These reasons should
be read with those of French CJ, Gummow and Crennan JJ in ICM.
However, in this matter particular reliance was placed by the appellants
upon s 100 of the Constitution.
It is convenient to describe the background to the matter, particularly to
indicate the broader context in which those arguments for a grant of special
leave based on s 100 were advanced.

THE NATIONAL WATER INITIATIVE AGREEMENT

On
25 June 2004, the Commonwealth of Australia (the third respondent) and
the Governments of New South Wales, Victoria, Queensland, South Australia,
the Australian Capital Territory and the Northern Territory entered into an
intergovernmental agreement known as the National Water Initiative
("the NWI"). In its Preamble, the agreement stated[6]:

The Parties agree to implement this National Water Initiative
.... in
recognition of the continuing national imperative to increase the
productivity and efficiency of Australia's water use, the need to service
rural and urban communities, and to ensure the health of river and
groundwater systems by establishing clear pathways to return all systems to
environmentally sustainable levels of extraction.

Paragraph 27
of the NWI provides:

Recognising that States and Territories retain the vested rights to
the use, flow and control of water, they agree to modify their existing
legislation and administrative regimes where necessary to ensure that their
water access entitlement and planning frameworks incorporate the features
identified in paragraphs 28-57 below[7].

Paragraph 39 of the NWI provides for the preparation of statutory water
plans by States and Territories. Schedule E to the NWI contains
guidelines for preparing water plans. Clause 2 of Sched E provides
that:

Where systems are found to be overallocated or overused,
the relevant plan should set out a pathway to correct the overallocation
or overuse.

Terms
which are italicised in the NWI are defined in the glossary contained in
Sched B(i).

"[O]verallocation"
is defined as referring:

to
situations where with full development of water access entitlements
in a particular system, the total volume of water able to be extracted by entitlement
holders at a given time exceeds the environmentally sustainable level
of extraction for that system.

"[O]verused"
is defined as referring:

to situations where the total volume of water actually extracted for
consumptive use in a particular system at a given time exceeds the environmentally
sustainable level of extraction for that system. Overuse may arise in
systems that are overallocated, or it may arise in systems where the planned
allocation is exceeded due to inadequate monitoring and accounting.

In
turn, "environmentally sustainable level of extraction" is defined
as:

the level of water extraction from a particular system which, if
exceeded would compromise key environmental assets, or ecosystem functions
and the productive base of the resource.

"[E]ntitlement
holders" is not expressly defined but plainly means the holder of a
"water access entitlement", a term that is defined to mean:

a perpetual or ongoing entitlement to exclusive access to a share of
water from a specified consumptive pool as defined in the relevant water
plan.

"[C]onsumptive
pool" is defined as:

the amount of water resource that can be made available for consumptive
use in a given water system under the rules of the relevant water
plan.

"[C]onsumptive
use" is defined as:

use of water for private benefit consumptive purposes including
irrigation, industry, urban and stock and domestic use.

From
this series of inter-locking definitions, it can be appreciated that par 39
and Sched E of the NWI contemplate the creation, by the States and
Territories who have agreed to the NWI, of statutory water plans which
involve reduction of water access entitlements where this is necessary to
achieve the environmentally sustainable use of water systems.

Paragraph 97
of the NWI is directed to addressing the consequences for entitlement
holders arising from the reduction of their entitlements:

The Parties agree to address significant adjustment issues affecting water
access entitlement holders and communities that may arise from
reductions in water availability as a result of implementing the reforms
proposed in this Agreement.

(i)

States
and Territories will consult with affected water users, communities and
associated industry on possible appropriate responses to address these
impacts, taking into account factors including:

the fact that water users have benefited from using the resource in the
past;

(c)

the scale of the changes sought and the speed with which they are to be
implemented (including consideration of previous changes in water
availability); and

(d)

the risk assignment framework referred to in paragraphs 46 to 51[8].

(ii)

The
Commonwealth Government commits itself to discussing with signatories to
this Agreement assistance to affected regions on a case by case basis
(including set up costs), noting that it reserves the right to initiate
projects on its own behalf.

THE FUNDING AGREEMENT

On
4 November 2005, the Commonwealth and the State of New South Wales
("the State") (the second respondent) entered into an agreement
titled "Funding Agreement in Relation to Funding from the Australian
Government Water Fund for the Following Water Smart Australia Project:
Achieving Sustainable Groundwater Entitlements" ("the Funding
Agreement").

Item 1
of the Schedule to the Funding Agreement contains details of what is
referred to in the Funding Agreement as the Project[9].
Item 1.6 of the Schedule provides that:

The Project requires the State to:

(a)

implement,
from 1 July 2006, Water Sharing Plans (as provided for in the Water Management
Act 2000 (NSW)) that reduce (over a 10 year period) the water
entitlements of water licence holders in the Lower Gwydir, the Lower
Lachlan, the Lower Macquarie, the [L]ower Murray, the Lower Murrumbidgee and
the Upper and Lower Namoi groundwater systems (all of which are referred to
in this Schedule as 'the Groundwater Systems') to ensure sustainable future
use of those Groundwater Systems;

(b)

ensure
that after sufficient consultation with licence holders and other
stakeholders, the Water Sharing Plans for the Groundwater Systems include a
method for reducing entitlements to sustainable yield and take account of,
among other things, each licence holders' [sic] history of extraction of the
relevant Groundwater System;

(c)

make
up-front ex gratia structural adjustment payments to licence holders
of the Groundwater Systems to allow them to better manage the transition to
reduced and sustainable water entitlements; and

(d)

establish
and administer a Community Development Fund.

Clause 5.1 of the Funding Agreement refers to the State's agreement to
carry out the Project. Clause 4.1 deals with the Commonwealth's provision
of funding for the Project and Item 2 of the Schedule sets out in detail
the financial contributions of the Commonwealth to be provided for the
Project.

THE APPELLANTS AND THE LOWER MURRAY WATER SHARING PLAN

The
appellants are individuals and corporations conducting farming operations in
the Lower Murray area of the State. They held bore licences under Pt 5 of the Water Act
1912 (NSW) ("the 1912
Act"), which entitled them to extract groundwater. Their
entitlements were significantly reduced upon replacement of the bore
licences by aquifer access licences and supplementary water licences issued
with effect 1 November 2006. These changes followed upon the making by
the first respondent ("the Minister") of the "Water Sharing
Plan for the Lower Murray Groundwater Source" ("the Lower Murray
Plan") by order pursuant to s 50 of the Water
Management Act 2000 (NSW) ("the 2000
Act").

By
proceedings in the Land and Environment Court of New South Wales, the
appellants sought a range of relief including declarations that the Lower
Murray Plan was void and inoperative and that their bore licences had not
been affected by it.

The
Commonwealth successfully applied to the Land and Environment Court for an
order dismissing the proceedings:
(2007) 157 LGERA 379. The Court of Appeal of the Supreme Court of New South Wales (Spigelman CJ,
Allsop P and Handley AJA - [2008]
NSWCA 338; (2008) 73 NSWLR 196) granted leave to appeal but dismissed
the appeal.

THE APPEAL TO THIS COURT

Special
leave to appeal to this Court was granted on 1 May 2009 upon two
grounds. The first is to the effect that the Funding Agreement required the
State to use its powers to acquire property on unjust terms and therefore
could not be authorised by federal law. By summons dated 13 August
2009, the Commonwealth sought leave to file out of time a Notice of
Contention ground 2 of which is to the effect that, in any event, there
had been no acquisition of property within the meaning of s 51(xxxi) of the Constitution.
That leave should be granted. For the reasons given in ICM, the
replacement of the bore licences involved no acquisition of the property of
the appellants within the meaning of s 51(xxxi). A consequence is that the first ground of appeal fails.

The
second ground is that the Court of Appeal erred in holding that "the
invalidity of [the Funding Agreement] was not legally relevant to [the
Minister's] decision to issue [the Lower Murray Plan] notwithstanding that
the Minister was guided by that agreement". This ground also fails.

First, as indicated in ICM, while the decision in P J Magennis
Pty Ltd v The Commonwealth (1949) 80 CLR 382; [1949] HCA 66,
contrary to the submission of the Commonwealth, should not be reopened, the
Funding Agreement did not lead to the taking of steps involving the
acquisition of the property of the appellants.

Secondly, it was open to the
Minister to treat the existence of the Funding Agreement as a relevant (even
if not imperative) consideration in deciding to exercise the power conferred
by s 50 of the 2000
Act to make a plan under that section.

SECTION 100 OF THE CONSTITUTION

The
appellants seek an order expanding the scope of the grant of special leave
to include a ground that the National
Water Commission Act 2004 (Cth) and the Funding Agreement were laws or regulations of trade or
commerce within the meaning of s 100 of the Constitution.
The Commonwealth seeks leave to file a Notice of Contention denying the
engagement of s 100 in this case. These orders sought should be made. For the reasons which
follow, the appeal on the s 100 ground also fails.

Section 100 states:

The Commonwealth shall not, by any law or regulation of trade or
commerce, abridge the right of a State or of the residents therein to the
reasonable use of the waters of rivers for conservation or irrigation.

The section should be read with the text of s 98 in mind. This states:

The power of the Parliament to make laws with respect to trade and
commerce extends to navigation and shipping, and to railways the property of
any State.

In
Morgan v The Commonwealth
(1947) 74 CLR 421 at 454-455, 458-459; [1947] HCA 6 it was held that the prohibition imposed by s 100 applied only to laws which were capable of being made under s 51(i) and s 98 of the Constitution,
and, for example, did not apply to laws supported by the defence power (s 51(vi)). Thereafter, in
The Commonwealth v Tasmania (1983) 158 CLR 1 at 154; [1983] HCA 21
Mason J said that, for the construction of s 100:

Section 98 is of special significance because

(1)

it provides that Parliament's power
with respect to trade and commerce extends to navigation and shipping;

(2)

it demonstrates that the references in other sections to a law or regulation
of trade and commerce are references to laws which are made, or perhaps can
be made, under s 51(i) as explained by s 98;
and

(3)

it thereby suggests that the primary purpose of s 100 was to safeguard the rights of a State and its residents to the use of
waters in rivers used for interstate trade and commerce including navigation
and shipping, viz, the Murray River.

His Honour added at 154

At first glance it may seem somewhat artificial to confine the
restriction on legislative power to laws made, or capable of being made, in
exercise of one power when a somewhat similar effect in relation to the use
of waters of rivers by a State and its residents for conservation or
irrigation might be achieved by the Commonwealth in the exercise of other
legislative powers. Why, one might ask, would the framers of the Constitution confine the pursuit of the objective – the protection of the State and its
residents in relation to the use of the waters – to some Commonwealth laws
but not others?

The answer to this question probably lies in the importance of the Murray
River to New South Wales, Victoria and South Australia and the residents of
those States and the apprehensions entertained by them as to the impact of
the Commonwealth's legislative powers under ss 51(i) and 98.

The
appellants sought leave to reopen Morgan. As will appear, it is
unnecessary to rule upon that application. Other issues of construction of s 100 also appeared in the course of argument. One is whether the term "residents therein" is confined to individuals and thus could not
include the corporate appellants:
Cf Australasian Temperance and General Mutual Life Assurance Society Ltd v
Howe (1922) 31 CLR 290 at 299, 320-321, 334-335; [1922] HCA 50.
Another is whether as between riparian States and their residents s 100 guarantees access to the use of the waters for the purposes mentioned, or
does no more than impose a restriction upon the exercise of the power of the
Commonwealth. Mason J left the point open in the Tasmanian Dam Case
at 153.

THE ABSENCE OF NECESSARY RIGHTS IN THE APPELLANTS

It
is unnecessary to consider these matters because the appellants must first
show that they had, within the meaning of s 100,
the right "to the reasonable use of the waters of rivers for
conservation or irrigation". They had no such right.

In
the light of s 4B of the 1912
Act and as explained in ICM, the appellants had no common law
right to the extraction and use of groundwater for irrigation. They had the
right (or, more accurately, the liberty) to do so given by their bore
licences. But the bore licences did not permit the use for irrigation of
"the waters of rivers" within the meaning of s 100
of the Constitution.

Three
reasons support that conclusion respecting the construction of s 100. First, the compromise represented by the formulation of s 100 responded to the conflicting interests of the colonies of New South Wales,
Victoria and South Australia with respect to the Murray-Darling river
system. By 1855, South Australia had the benefit of a river trade
extending throughout that system; goods were off-loaded before their
transport reached what even then was the non-navigable mouth of the Murray
and were taken to Victor Harbour and Port Adelaide:
Clark, "The River Murray Question: Part 1 – Colonial Days", (1971) 8 Melbourne University Law Review 11
at 24-25.
South Australia had as its primary interest navigation and the maintenance
of the river flow for that purpose. Victoria was the first colony to exploit
the advantages of irrigation (La Nauze, Alfred Deakin, (1965), vol 1 at
84-88),
and was interested in the diversion of water from the upper Murray and all
tributaries within its territory. New South Wales had the further interest
based upon the denial by Imperial legislation in 1855 (i.e.
18 & 19 Vict c 54)[10]
of any claim by Victoria to a mid-river boundary line along the Murray; New
South Wales claimed the exclusive use of the waters of the Murray above the
border with South Australia.

Secondly,
as explained in ICM, the common law had distinct principles
respecting the use of surface water and groundwater; this distinction then
was reflected in the legislative regulation of surface water and groundwater
by the colonies and then by the States, which proceeded at different paces
and in different terms.

Thirdly,
the ordinary understanding of the expression "the waters of
rivers" in 1900 was that given by Quick & Garran in their commentary
on s 100 (The Annotated Constitution of the Australian Commonwealth, (1901) at 893[11]),
namely:

A river is a stream flowing in a defined channel; and the waters of a
river are the waters flowing over its bed and between its banks. Rainwater
flowing over or percolating through the soil, but not flowing in a defined
channel, is not the water of a river.

They added:

One interesting question that arises is whether the great lakes and
billabongs into which the Darling River spreads in flood-time can be called
part of the river, or whether the waters which they then contain can be
called the waters of the river.

ORDERS

The
grant of special leave should be expanded and there should be leave to the
Commonwealth to file its Notices of Contention, as indicated earlier in
these reasons. The appeal should be dismissed. The appellants should pay the
costs of the third respondent.

Hayne
J, Keiffel J & Bell J

This appeal and application for special leave were
heard immediately after the matter of ICM Agriculture Pty Ltd v The
Commonwealth (2009) 261 ALR 653; [2009]
HCA 51. These reasons must be read with our reasons in ICM.

The
appellants held bore licences under Pt 5 of the Water Act 1912 (NSW) ("the 1912
Act") which permitted them to extract groundwater in the Lower
Murray region. Those licences were cancelled and, in their place, aquifer
access licences were issued under the Water
Management Act 2000 (NSW) ("the 2000 Act").
The aquifer access licences issued to the appellants permit them to extract
less water than could have been extracted under the bore licences. These
steps were taken in consequence of an agreement ("the Funding
Agreement") made in 2005 between the Commonwealth and the State of New
South Wales.

By
the Funding Agreement, the Commonwealth agreed to provide money to the State
for a "project" known as the "Achieving Sustainable
Groundwater Entitlements" project. The project required the State to
reduce the groundwater extraction entitlements of the appellants and others
in relation not only to the Lower Murray region, but also to other areas of
the State. Entitlements to extract groundwater in the Lower Murray region
were to be reduced by a total of 68% over 10 years.

Section 50 of the 2000
Act empowered the State Minister, by order published in the New South
Wales Government Gazette, to make a plan (among other things) for any
water source, or part of a water source, for which a management plan was not
then in force. In 2006, by order published in the New South Wales
Government Gazette, the Minister for Natural Resources of New South
Wales made the "Water Sharing Plan for the Lower Murray Groundwater
Source". That plan ("the Water Sharing Plan") provided for
the adjustment of water entitlements in respect of the Lower Murray
Groundwater Source in accordance with the Funding Agreement.

In
2007, the appellants instituted proceedings in the Land and Environment
Court of New South Wales challenging the validity of the Water Sharing Plan,
the Funding Agreement, and Commonwealth legislation under which it was
alleged that the Funding Agreement had been made: the Natural
Resources Management (Financial Assistance)
Act 1992 (Cth) ("the Financial
Assistance Act") and the National
Water Commission Act 2004 (Cth) ("the NWC
Act"). The appellants alleged that the steps taken to reduce their
water entitlements amounted to an acquisition of property otherwise than on
just terms, contrary to s 51(xxxi) of the Constitution.
The appellants further alleged that, contrary to s 100 of the Constitution,
the Commonwealth had "by any law or regulation of trade or commerce,
abridge[d] the right of a State or of the residents therein to the
reasonable use of the waters of rivers for .... irrigation". The
appellants also alleged that the steps taken under the 2000 Act to make and implement the Water Sharing Plan were legally infirm because one
or more of the relevant decision-makers had taken irrelevant considerations
into account.

The
Commonwealth sought and obtained summary judgment in the Land and
Environment Court (see Arnold v Minister Administering Water Management Act 2000 [2007]
NSWLEC 531; (2007) 157 LGERA 379)
dismissing the appellants' claims against the Commonwealth. The Land and
Environment Court (Lloyd J) held, ibid at 406 [86],
that it had no jurisdiction to entertain the appellants' claims against the
Commonwealth. It further held, ibid at 408-409 [98]-[100], that, in any event, this Court's decisions in P J Magennis Pty
Ltd v The Commonwealth
(1949) 80 CLR 382; [1949]
HCA 66 and Pye v Renshaw
(1951) 84 CLR 58; [1951]
HCA 8 required the conclusion that it was not arguable that either the Financial Assistance
Act or the NWC
Act was in any relevant respect a law with respect to the acquisition of
property.

Those
who are now appellants in this Court sought leave to appeal to the Court of
Appeal of the Supreme Court of New South Wales against the orders of the
Land and Environment Court dismissing their claims against the Commonwealth.
The Court of Appeal (Spigelman CJ, Allsop P and Handley AJA)
granted leave to appeal but dismissed the appeal: Arnold v Minister Administering the Water Management Act 2000 (2008) 73 NSWLR
196.

The
Court of Appeal concluded, ibid at 222 [117]-[118], that even if, as the appellants submitted, there was no valid Commonwealth
law supporting the making of the Funding Agreement and even if, as the
appellants further submitted, the Funding Agreement itself was invalid,
nothing in the 2000 Act or the Water Sharing Plan depended on the existence of a valid Commonwealth
law or a valid agreement between the Commonwealth and the State. The Court
of Appeal rejected, ibid at 222 [119], the appellants' further argument that the State Minister had taken into
account irrelevant considerations in exercising powers under the 2000
Act by taking account of the existence of what the appellants submitted
was an invalid Commonwealth law and an invalid ("non-existent")
Funding Agreement.

The
Court of Appeal further held, ibid at 217 [92], that neither the Funding Agreement, nor either of the impugned Commonwealth
Acts (the Financial
Assistance Act or the NWC
Act), was a "law or regulation of trade or commerce" which,
contrary to s 100 of the Constitution,
abridged "the right of a State or of the residents therein to the
reasonable use of the waters of rivers for .... irrigation". The Court
of Appeal held, ibid at 217 [89], that this conclusion was required by this Court's decision in Morgan v
The Commonwealth [1947]
HCA 6; (1947) 74 CLR 421 at 455; [1947]
HCA 6,
in which it was held that the restraint on Commonwealth legislative power
provided by s 100 applied "only to laws which can be made under the power conferred upon
the Commonwealth Parliament by s 51(i)". The Court of Appeal recorded
([2008]
NSWCA 338; (2008) 73 NSWLR 196 at 217 [90])
that the appellants did not submit that the laws which they sought to impugn
were capable of answering that description.

Argument
in the Court of Appeal proceeded on the assumptions that the reduction of
the appellants' water entitlements constituted an acquisition of property
other than on just terms (ibid at 218 [94]),
that the appellants had rights to the reasonable use of the waters of rivers
for irrigation and that those rights had been abridged (ibid at 217
[88]).
These assumptions were challenged in this Court, and accordingly, the
arguments advanced in this Court departed in significant respects from those
advanced in the courts below. It is necessary, however, to deal with only
three aspects of the appellants' arguments in this Court:

the
proposition that the cancellation of bore licences and issue of aquifer
access licences permitting the extraction of less water was an acquisition
of property within the meaning of s 51(xxxi);

the proposition that taking groundwater under the bore licences or the
aquifer access licences was "use of the waters of rivers" within
the meaning of s 100;
and

the proposition that the steps taken to effect the cancellation of
bore licences and issue of aquifer access licences were legally infirm
because the State Minister had taken irrelevant considerations into account
in making the Water Sharing Plan.

The
appellants require a grant of special leave to agitate questions about the
application of s 100. They should have that leave. The Commonwealth should be given leave to rely
on grounds in its notices of contention which sought to answer the matters
put in issue by the appellants' reliance upon s 51(xxxi) and s 100.

These
reasons will demonstrate that each of the three propositions identified
should be rejected. It follows that the appeal should be dismissed.

ACQUISITION OF PROPERTY?

For
the reasons given in ICM, the cancellation of bore licences and issue
of aquifer access licences permitting the extraction of less water did not
constitute an acquisition of property within the meaning of s 51(xxxi).
It follows that the further questions that may otherwise have arisen about
the intersection of ss 51(xxxi) and 96 of the Constitution and about whether Magennis or Pye v Renshaw should now be
overruled need not be decided.

WATERS OF RIVERS

The
Water Sharing Plan described the Lower Murray Groundwater Source as
including "all water contained in the Calivil, Renmark, and the Lower
Shepparton unconsolidated alluvial aquifers deeper than 12 metres below the
ground surface" within an area delineated in a schedule to the plan. It
noted that the Lower Murray Groundwater Source is recharged primarily from
an overlying groundwater source – the Shepparton Groundwater Source –
which in turn is recharged "in part, from irrigation losses".

The
plan identified a number of objectives. At the risk of some
oversimplification, the central purpose of the plan can be understood as
being to reduce, and then manage, the extraction of groundwater from the
Lower Murray Groundwater Source to a level variously described as "an
ecologically sustainable level" or the "estimated sustainable
yield".

Water
extracted from the Lower Murray Groundwater Source is not encompassed by the
expression in s 100: "the waters of rivers". The water at issue in this appeal is not
surface water. It is groundwater that percolates through the soil. It does
not flow in a defined channel. Together, these are reasons enough to
conclude that the water in question does not form part of "the waters
of rivers". But the conclusion is reinforced by consideration of the
purpose served by s 100. An important purpose (perhaps the purpose) behind the inclusion of s 100 in the Constitution was to mark a particular limit upon the power of the federal Parliament to
regulate navigation. As Quick & Garran pointed out (in The Annotated Constitution of the Australian Commonwealth, (1901) at 880,
§416),
the federal Parliament's power to legislate with respect to trade and
commerce (explicitly extended by s 98 to "navigation and shipping") "would have prevailed
absolutely against any claims by the States to the use of the water" of
rivers as "highways of interstate commerce" or for the development
of land. As those authors went on to say (at 880,
§416),
"the object of [s 100] is to limit the paramountcy of the
navigation power so far as it may interfere with 'the reasonable use' of the
waters for State purposes" of conservation or irrigation. The federal
Parliament's legislative powers with respect to navigation have no immediate
intersection with the extraction, for use in irrigation, of groundwater that
percolates through the soil and does not flow in a defined channel. They do
have an obvious intersection with the use of the waters of rivers for that
purpose.

Because
the waters at issue in this matter are not "the waters of rivers"
the further questions argued about the operation of s 100 need not be examined. In particular, it is not necessary to decide whether
the decision in Morgan should be reopened.

IRRELEVANT CONSIDERATIONS?

The
appellants' argument that the State Minister had taken irrelevant
considerations into account in deciding whether to make the Water Sharing
Plan was understood by the Court of Appeal as being an argument that the
Minister had taken account of the existence of what was alleged to be one or
more invalid Commonwealth laws and what was alleged to be an invalid Funding
Agreement. The appellants' amended points of claim in the Land and
Environment Court had described the allegedly irrelevant considerations
taken into account by the Minister in rather different terms. In their
pleading the appellants identified the matter that had been taken into
account as being "the dictation or requirement of the Commonwealth
Government as to the basis for reductions in water allocation rather than a
broad approach of general application balanced by considerations of equity
amongst water users in the State and having regard to the environment of New
South Wales". The appellants did not seek to make any case in this
Court or in the Court of Appeal that the State Minister acted under
dictation.

Assuming,
without deciding, that it was open to the appellants to frame their argument
along the lines described by the Court of Appeal, repeated in this Court,
the argument should not be accepted. Because there was not, as the
appellants submitted, an acquisition of property, neither the Funding
Agreement nor either of the two federal statutes whose validity the
appellants impugned was invalid for any want of provision of just terms.
Having regard to the subject matter, scope and purposes of the 2000
Act as a whole, and s 50 in particular, the existence of the Funding Agreement was not a
consideration irrelevant to the exercise of the power given to the State
Minister by s 50 of the 2000
Act to make the Water Sharing Plan. On its face the Water Sharing Plan
was intended, in the words of s 3 of the 2000
Act, "to provide for the sustainable and integrated management of
the water sources of the State for the benefit of both present and future
generations". Under the Funding Agreement the State was to receive
money to effect the Water Sharing Plan. The Funding Agreement was not an
irrelevant consideration in exercising the power given by s 50.

CONCLUSION AND ORDERS

For
these reasons the appeal should be dismissed. Neither the Minister nor the
State sought costs. The appellants should pay the Commonwealth's costs.

Heydon
J

The background is set out in the reasons for judgment of Gummow and
Crennan JJ.

ICM
Agriculture Pty Ltd v The Commonwealth [2009]
HCA 51; (2009) 261 ALR 653 at 694-724 [158]-[257]; [2009]
HCA 51 was argued immediately before this appeal. In that case, reasons were
given which differ in some significant respects from what was advocated by
the appellants in this appeal. However, those reasons lead to the conclusion
that the replacement of the appellants' bore licences by aquifer access
licences was invalid. The bore licences remain on foot.

Accordingly
the orders which the appellants seek – allowing the appeal to this Court
and the Court of Appeal, both with costs, and dismissing the third
respondent's application to the Land and Environment Court of New South
Wales, with costs – should be made.

The
appellants' application for special leave to add an additional ground of
appeal in relation to s
100 of the Constitution should be dismissed. Since success on that ground of appeal, were special
leave to be granted, would not result in substantive orders more favourable
than those described in the previous paragraph, there is no point in
considering the merits of the appellants' arguments in a case which is far
from satisfactory as a mechanism for doing so.

[1]
On the hearing of the appeal the appellants contended for the invalidity of the
Funding Agreement only, although the proposed ground of appeal in relation to s 100 also impugned the
National
Water Commission Act 2004 (Cth).

[2]
A declaration was also sought as to the invalidity of the Natural
Resources Management (Financial Assistance)
Act
1992 (Cth). That claim was not material to the appellants' submissions in
this Court.

[3]
A copy of the 1897 draft Bill, as framed and approved at the Adelaide
Convention, is reproduced in Williams, The Australian Constitution:
A Documentary History, (2005) at 637. These provisions appear at 648-649.

[8]
Paragraphs 46 to 51 of the NWI assign the risk of future reductions in the
availability of water for consumptive use between water access entitlement
holders and the Commonwealth, State and Territory Governments.

[9]
The Project is defined in cl 1 of the Funding Agreement by reference to
Item 1 of the Schedule.